Government considering new tax on EV drivers in Budget

"Drivers of electric vehicles (EVs) could be facing a new tax in next month's Budget. With pressure on the chancellor to find tens of billions of pounds in additional revenue, the BBC understands there have been "conversations" within government about the possibility of a new levy on EVs. A government spokesperson told the BBC: "Fuel duty covers petrol and diesel, but there's no equivalent for electric vehicles. We want a fairer system for all drivers.""

"According to the Telegraph EV drivers could be charged 3p per mile, on top of other road taxes, amounting to an extra 12 on a journey from London to Edinburgh. Drivers of hybrid cars would also be charged, but at a lower rate. The paper says the idea is that owners would have to estimate, and pay for, their road usage for the year ahead."

"Drivers of petrol and diesel vehicles pay fuel duty, so the transition to electric vehicles leaves a shortfall in government revenues, which are already under significant pressure. Since April of this year, electric cars stopped being exempt from vehicle excise duty, due to a change made in the 2022 Budget. "We want a fairer system for all drivers whilst backing the transition to electric vehicles," a government spokesperson told the BBC. "It is right to seek a tax system that fairly funds roads,"

Government officials are considering a new levy on electric vehicles as fuel duty revenue falls with the transition from petrol and diesel. Reports propose a pay-per-mile charge of about 3p per mile for EVs, with hybrids charged at a lower rate; estimated annual mileage would be paid in advance, with credits or top-ups after reconciliation. The change follows removal of a full VED exemption for electric cars in April. The government states aims to create a fairer road-funding system while continuing financial support for the EV transition, including grants reducing upfront vehicle costs.

Read at www.bbc.com